Currency trading takes place in the foreign exchange market. Trillions of dollars are traded in the foreign exchange market every day, making it the largest financial market in the world.

In 2019, the daily turnover of the forex markets reached $6.6 trillion, up from $5.1 trillion in 2016. In 2019, the total value of the forex industry will be $2.409 trillion , up from $1.934 trillion in 2016.

Forex trading and gambling are often compared because they both involve risking funds on a certain price movement that may or may not occur. It is believed that the only difference between the two is luck.

Key Differences Between Currency Trading and Gambling

Is forex actually like gambling? Between these two activities, there are several significant differences, and the most fundamental is related to probability.

  • During the game, the house understands the chances of winning and losing positions and transforms them in such a way that losses are more frequent than wins.
  • Currency traders are not in competition with a single house; they compete with other traders, as well as themselves. Because of this, they hold the power to swing the odds in their favor when using various strategies and techniques while trading.
  • People believe that gambling and forex are somewhat similar because they both deal with luck and chance. Nevertheless, there are many fundamental differences between them, the most important of which is probability.
  • A game of chance, for example, involves two participants: the player and the house. A player is never able to beat the house, no matter how good he is. Therefore, the house sets higher odds for losing bets than for winning bets. While some players can win big jackpots, others will lose, tipping the odds in favor of the casino.
  • Forex trading, on the other hand, is a market where there is no “house” against which a trader should act. Merchants are in competition with other merchants, as well as themselves, and they must make their decisions in such a way as to increase their chances of receiving a payout. In other words, a trader can turn the odds in his favor in order to become a house.
  • Individuals can improve their chances of success in gambling and Forex. In gambling, however, the house always wins over the player, unlike forex trading. All of these techniques can only reduce it, not completely eliminate it.
  • With trading, you can use the tools available through many brokers to improve your performance.
  • However, odds can be manipulated in trading, so the trader has the edge. There are many ways to manipulate probabilities. Technical analysis is the most common method. Analysts can use technical analysis to determine where the price will go next based on past price movements. These indicators will help them determine where the price will go next.
  • Fundamental analysis of a company, market or country also looks at current conditions. Using it, traders can determine whether an asset will go up, down or remain unchanged.
  • Risk management is another method of retaining an advantage, which has several components. Portfolio diversification is a way to reduce the risk of large losses and maintain a more stable account: traders use different assets simultaneously.

Characteristics of players in forex trading

Players do not view their activities as businesses. Their approach to forex is zealous and dangerous. This is the main difference between forex trading and gambling. Price Action trading can be used by traders to give themselves an edge in the market.

Players are often motivated by hope. We hope they can recover from past losses and get back on track for the next win. Hope is a very dangerous thing when it comes to Forex trading.

At the end of the line

Over time, most retail Forex traders lose money. Nevertheless, a significant minority make money over time.

Unless you are a professional poker player, there are no long term winners in the game.

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